trade

 At 9:18 Friday night, I got an alert from the Washington Post. Barack Obama had slapped tariffs on imports of Chinese tires. Barack Obama's handling of this issue shows several things. First, it shows a real contempt for China, trade policy, and his international relationships more broadly. As one of my liberal friends likes to point out, this action demonstrates how the Democrats really cannot be taken seriously as the internationalist party.  And it shows the implicit contradictions in much of Obama's economic policy.

Let's start with the time of its announcement: 9:18pm. Really? Saturday morning in China? This tells us who the audience for this policy was: the United States. It tells us that Obama is willing to subordinate trade policy -- just before the G-20 meeting no less -- to domestic politics that he is embarassed about. Why else release this late on a Friday night?  (note that by statute, he didn't have to release a response to International Trade Commission recommendations until the 17th. He picked this timing)

By Saturday afternoon, China issues scathing remarks. By Sunday, they announce counter-tariffs against US chickens and auto-parts. We have a full scale trade war.  And Asian and European markets open the week down. Thanks Barack...

So Barack Obama started a trade war for entirely domestic reasons, jeopardizing the recovery, and is afraid of the headlines here, why he doesn't care about international opinion. How does that sound?

Now, why chickens and auto parts? I don't immediately understand the chickens, although I suspect it is a pretty good business for us, but I understand auto parts. 

US auto parts are made by the United Autoworkers, the same union that Obama bailed out when he bailed out GM and Chrysler, two companies that had becoming wards of their union pension funds. In addition to hurting the unions, this could hurt the auto manufacturers themselves, which Obama owns and which opposed the tire tariffs because it will raise their costs. First he screwed the car companies for the UAW, now USW. Perhaps this is a lesson for when he takes over the health care sector. 

So where was the logic in this? He helps his allies, with one hand, but hurts them with the other. He hurts the economy. He hurts the government run companies. And he opens a trade war just in time for the G-20 to create real structural damage to the US economy.

Furthermore, this is how he is celebrating the anniversary of the death of Lehman Brothers. By sticking the knife in the economy.

That's change I can believe in.

I was looking at a past post by Josh Kahn regarding our message problems, in which he pointed out that our message is actually worse off than our image.  What also struck me as I was reading the supporting NPR survey, though, was how much we have let the Democrats get away with putting forward popular slogans repeated over and over again that are not only factually inaccurate but also somewhat destructive.

A good example is trade.  Since at least 2004, Democrats have frequently railed against giving “tax breaks to companies that send jobs overseas”.  The mantra was repeated so often during the Democratic primaries that it became stuck in everyone’s head like a bad song played too many times on the radio.  In fact, Barack Obama’s second television advertisement explicitly referenced this too: “As president, he’ll end tax breaks for companies that export jobs, reward those that create jobs in America.”  I believe this is, in fact, the first policy proposal he has given in a general election ad.

But for all the outrage against the Republicans this has caused (especially in the Rust Belt), does ending these “tax breaks” make any sense?  The tax breaks that Obama and other Democrats are talking about refer to the long-time practice of not taxing company profits that are earned and remain overseas for further investment.  Forcing companies to pay the exorbitant U.S. tax rate would do nothing to stop outsourcing (considering that labor costs are much lower in India and China), but it will help cripple those companies in the face of foreign competitors whose governments don’t have to pander to the protectionist crowd.  

Its similar with Colombia. Democrats oppose a free trade agreement with Colombia that is disapproved by their union masters. This is in spite of the fact that only U.S. based companies would benefit from the agreement  because we already import the vast majority of Colombian goods duty-free.

If Republicans are serious about countering this issue, they should be constantly pointing out that the real problem with our tax code is that it imposes the second highest rate of taxation on corporations in the world, and thus it reduces our competitiveness.  The GOP has been defensive about trade for too long, and if they don’t fight back the Rust Belt will be gone for a long time.

Very sobering read. -Patrick

A new poll by widely respected Public Opinion Strategies pollster Glen Bolger has some very interesting data on an important question: What do voters think of the Republic message when it isn’t attached to the GOP label? His data is a perfect way to test whether voters…

A. Like what we have to say but simply don’t trust us after Bush, Iraq, Katrina, overspending, the bridge to nowhere, endless scandals (need I go on?).

Or

B. Don’t like us because they don’t agree with what we say we want to do for the country.